India Cements pulls in Big Bank

STREET SIGNS

The Bulls retribution was swift. After last week's ignominies, the markets bounced back at the start of the week. The Sensex surged 256 points, more than wiping out the entire losses suffered last week.

While last Thursday saw the index crashing by its biggest margin since May 17, 2004, today the tables were turned.

The index gains for the day was its biggest points rise in a single trading session since May 18, 2004.

With foreign fund buying continuing to be robust and oil prices dropping off, the doomsday predictions in the wake of last week's crash seems to hold no fears, at least in the short term.

Cementing gains

The Big Bank's desi fund was a buyer at the India Cements counter. The fund is said to have made the purchase at Rs 99 levels.

Interestingly, the fund buying happened at a time when the stock was slipping after touching 115 levels some two weeks back. But when buying interest increases in a stock, you can be rest assured that there is news waiting to happen.

So it was in India Cements' case too. The company has announced that it has acquired over 50 per cent stake in Andhra Pradesh based unlisted cement company - Visaka Cement Industry. Visaka Cements has a 1.12 million tonne cement plant in Andhra Pradesh.

With the outlook on cement prices firm, the fund seems to be on a strong footing. Analysts anticipate a 5-7 per cent rise in cement prices in the country this year.

In fact, Pearl Brokerage had noted in a recent sector report that the stabilization of cement prices at near all-time high levels, despite monsoons, reflects tight demand-supply dynamics in the industry.

The brokerage expects an 8 per cent growth in demand and estimates an industry capacity utilization levels of 87 per cent in FY06. This should translate into higher cement prices.

Happily for India Cements, South India, which is its key market, continues to see strong demand growth aided by rising demand for housing and infrastructure projects. The stock has seen a 137 per cent rise over the past one year.

Elder buyer

The Elder Pharmaceuticals stock is another one which has got a boost after its recent troubles. The stock which has been in doldrums since crossing Rs 250 levels in the first week of September was recently bought by one Mauritius -based fund at Rs 208 levels. The fund is said to have bought a lakh of shares at the counter.

There has been positive news flow at the counter of late, which seems to have interested the buyers. The company is planning to set up two formulation plants in Uttaranchal and Himachal Pradesh, with one of them in advanced stages of implementation.

The company also has plans to launch a new molecule, 'Diacerin' (for treatment of arthritis) in India under the trade mark 'Artrodar'. For this, Elder Pharma has entered into an in-licensing alliance with TRB Chemedica of Switzerland.